Question about creditors claiming on my chapter 13

[scotthey]

I sent this to my attorney over a week ago but since he's been paid, I guess he doesn't feel like answering questions anymore. Maybe someone here can help!


I was looking over our case on the internet and noticed something I have a question about. I see that a number of the people that made claims in our plan are secondary debt collectors that have purchased the discharged debts from the original creditors for pennies on the dollar. (Portfolio Recovery Associates, Altair OH XIII LLC) My question is how can this happen? I feel like these companies are just taking advantage of people falling on hard times and using the courts to do so... legally?

Maybe I’m missing something here but I just can’t see how something like this can be legal.

[mdl]

I asked that same question a while back. Don't worry about. The companies did sell it off. The jdb buys bunches and then finds out he has some bks in there...his loss!

[switch625]

This is my "Don't get me started" topic. Search "switch625" and "debt buyer" in this forum for more of my outrage on this topic.

Unfortunately this is legal and I feel the way you do, every single time I get my money orders and send them off to Memphis. Most of my unsecured debt was bought by debt buyers afte I filed BK. In fact only three of my many original unsecured creditors filed claims.

The only way to undue this is to object to each PofC from a debt buyer. Some on this forum may have done that and can give you a better answer on the outcome of contesting the claims. Talk to your attorney about this and see if it a feasbile (and for you, affordable) thing to do.

The only other thing is to write your Congressman and Senators in Washington. Copy Elizabeth Warren's Senate Office in DC too..maybe she and her staff will be interested, and ask them to introduce legislation to change the Bankruptcy Code to prohibit the selling of debt once a Ch 13 petition is filed. I know, ice cube's chance in hell of ever becoming law, but it might make you feel better.

[despritfreya]

There is nothing improper/wrong/illegal about someone, anyone, offering to purchase a claim either by paying the full value of the claim or at some discount. Nor, for bk purposes, should a debtor care unless he/she has a dispute over the original debt and/or is proposing to pay 100% of all allowed claims and has a dispute. You owe what you owe, it does not matter who controls the right to payment.

If there is a dispute over the original debt, say the amount owed, then object but only do so if it is cost effective. You wouldn't want to spend $500.00 in legal fees to dispute $300.00. Further, unless you are a 100% payback, why would you care? Knocking out a claim just means the other creditors will get a higher payback.

Des.

[LadyInTheRed]

I see that a number of the people that made claims in our plan are secondary debt collectors that have purchased the discharged debts from the original creditors for pennies on the dollar. (Portfolio Recovery Associates, Altair OH XIII LLC) My question is how can this happen? I feel like these companies are just taking advantage of people falling on hard times and using the courts to do so... legally?

First of all, I want to make sure you understand that your debts are not yet discharged. You have to finish your plan before they are discharged.

Yes, it is legal. The original creditor is not in the business of waiting to get paid from a Chap 13. They would rather sell the debt. The purchasers of the debt do not even know when they purchase them that the debtor is in bankruptcy. The debts are sold in huge lots of bad debt that the creditor decided not to collect. Those lots also include debts past the statute of limitations and debts that the original creditors decided aren't worth their time to try to collect.

The only way to undue this is to object to each PofC from a debt buyer. Some on this forum may have done that and can give you a better answer on the outcome of contesting the claims. Talk to your attorney about this and see if it a feasbile (and for you, affordable) thing to do.

You could object and hope the debt buyer doesn't have sufficient evidence to back up their claim. But, you risk having to pay attorney fees to do it and losing anyway.

[justbroke]

The only way to undue this is to object to each PofC from a debt buyer.

Rule 11 does not allow you to just "object to each" Proof of Concept from a debt buyer! There were at least two attorneys that were publicly spanked (sanctioned) for doing such. You are not allowed to file a paper, in this case an objection, without a cause for that objection . You can't just object because it's not the original owner of the debt. Debt is sold very often in Chapter 13s and it is quite common practice to sell these in bundles. The debt buyer takes the risk of, perhaps, not being able to recover any of the amount expended to buy the debt. Of course these portfolios of debt, the "bundles", have varying profiles and these junk debt buyers tend to know what they are doing in this space.

I am not advocated against filing objections to claims which clearly are not your debt or the amount is wrong, or there are other issues (secured versus unsecured, statute of limitations defenses, etc).

I also want to echo what Despritfreya wrote. Objecting and being successful only gives more money to the other creditors -- in a non 100% plan.

I wish everyone the best!